Moody's ups Lifepoint outlook

JoanE. Solsman

Moody's Investors Service increased the prospect of an upgrade for LifePoint Hospitals Inc.
LPNT, +0.80%
because it expects recent acquisitions, strategic partnerships and physician recruitment to fuel earnings growth.

In raising its outlook on rural-hospital operator to positive from stable, Moody's also noted that the company has ample liquidity.

At the beginning of the year, LifePoint chief executive William F. Carpenter III touted how the company has improved its volume, controlled costs and integrated new hospitals into its system. He said that the company has the flexibility to continue to invest in its hospitals and to pursue strategic acquisitions.

Its earnings rose in the first half, as it either increased admissions or improved revenue per patient to offset a decline in those admissions.

Monday, Moody's said it could upgrade LifePoint if the company is able to continue to increase earnings through acquisitions without disrupting operations nor using so much incremental debt that leverage begins to increase.

In addition, Moody's said it would want the company to realize positive same-hospital admissions growth while maintaining solid pricing growth, as well as further progress in dealing with upcoming debt maturities and the refinancing of a revolving credit facility.

On the flip side, Moody's said it could downgrade the rating if the company pursues takeovers or share repurchases aggressively with the use of incremental debt, or if the company encounters operating challenges that hinder free cash flow notably.

Earlier this month, LifePoint's board authorized a stock repurchase program of up to $250 million over the coming year and a half.

Moody's currently rates Lifepoint at Ba3, which is three notches below investment-grade territory.

In July, rival rating firm Fitch Ratings upgraded LifePoint by a notch because of its greater degree of profitability among its peers and successful acquisition strategy.

If Moody's were to upgrade LifePoint by one notch, then Moody's and Fitch would rate them at equivalent levels.

Intraday Data provided by SIX Financial Information and subject to terms of use.
Historical and current end-of-day data provided by SIX Financial Information. Intraday data
delayed per exchange requirements. S&P/Dow Jones Indices (SM) from Dow Jones & Company, Inc.
All quotes are in local exchange time. Real time last sale data provided by NASDAQ. More
information on NASDAQ traded symbols and their current financial status. Intraday
data delayed 15 minutes for Nasdaq, and 20 minutes for other exchanges. S&P/Dow Jones Indices (SM)
from Dow Jones & Company, Inc. SEHK intraday data is provided by SIX Financial Information and is
at least 60-minutes delayed. All quotes are in local exchange time.